I think she hated the real world and tried to create the dream world as an escape. However, dreams are more subject to the whims of our minds than our conscious decisions; she wanted to create a world where she could be happy, but her subconscious, already damaged by whatever trauma caused her to become a shut-in, came along and started warping everything.
Maybe the effects were the tools she tried to use to change her dream world. Some of them, the ones that just change her appearance, turned out to be duds, but ultimately all of them, even the most useful one of all (the knife), are useless. No matter which effects she uses, no matter what she kills, all she has to do is exit the dream world and go back, and everything is back to the way it was.
She looked all over the dream world trying to find the effect that could allow her to regain control (finding all of the effects takes a lot of exploration and takes Madotsuki almost everywhere in the dream world), but none of them worked. She had long since abandoned the real world, and her own mind betrayed her and destroyed the last place she could escape. Thus, she felt there was nothing she could do but end it all.